China's CPI Cools To 5.5% And Food Prices Slow To 11.9%

BEIJING (AP) — China's stubbornly high inflation fell in October,
giving Beijing room to stimulate its economy amid weak U.S. and
European growth.

Consumer prices rose 5.5 percent from a year ago, down from
September's 6.1 percent, data showed Wednesday. Politically
volatile food costs rose 11.9 percent but that was down from the
previous month's 13.4 percent.

The decline gives China's leaders room to boost growth if
necessary by reversing interest rate hikes and other curbs
imposed to cool an overheated economy. Those controls squeezed
entrepreneurs and fed fears the world's second-largest economy
might slow too abruptly at a time when hopes are pinned on
relatively robust China to prop up global growth.

"Over the past year they had a single target — control inflation.
But now that inflation is fading, they are going to focus on
economic growth," said Capital Economics analyst Qinwei Wang.

Beijing has hiked interest rates repeatedly and imposed
investment curbs to cool growth that hit 10.3 percent last year.
But now that those measures are gaining traction, China faces the
dual threats of plunging consumer demand in key U.S. and European
export markets and a cooling real estate market, a key driver of
growth.

A government clampdown on bank lending has squeezed
entrepreneurs, adding to the pain of lower foreign sales and
forcing thousands into bankruptcy. Beijing has promised to help
them by selectively easing some credit controls, though it says
curbs imposed to cool surging housing costs will stay in place.

Inflation peaked at a 37-month high of 6.5 percent in July,
driven by sharp rises in food costs caused by strong demand and
summer flooding that damaged crops. Analysts expect inflation to
ease further as the autumn harvest comes in, though the
government says it will overshoot the official target of 4
percent for the year.

Economic growth slowed to 9.1 percent in the three months ending
in September from 9.5 percent the previous quarter. The
International Monetary Fund is forecasting 9.5 percent growth for
the full year.